Trouble continues at the bank

THE GOVERNOR of the Bank of Portugal, Vítor Constâncio, has warned the current chairman of Millennium bcp that the names on his list for the troubled bank’s leadership could be thrown out.

Filipe Pinhal was given the warning as a consequence of the ongoing investigations by the Bank of Portugal (BdP) into Millennium bcp’s involvement with 17 offshore entities which Portugal’s largest private bank had failed to declare to the BdP.

“There has been enormous pressure on behalf of the national media for the Bank of Portugal to intervene before the bank’s General Assembly meeting at the end of the month,” admitted Vítor Constâncio who added that there was a risk following the General Assembly that the list of elected senior managers would be annulled leading to fresh bcp elections.

“We would intervene to guarantee the stability of bcp management,” confirmed the governor at a meeting of the Parliamentary Commission of Economics and Finances.

The governor said that, despite the ongoing investigations, a list of provisional candidates for the bank’s leadership would be published but advised managers that “each one of them would have to evaluate the risk of his involvement”.

“It will be their choice and not that of the Bank of Portugal for the list of people for posts at various levels of responsibility,” he said.

“There are people at the bank that don’t know anything and don’t participate in anything, just as there are people that know things and don’t tell anybody what they know, and others who know and interfere in the process,” said Vítor Constâncio.

In relation to the investigation over unsecured loans granted to former Chairman Jardim Gonçalves’ son, Vítor Constâncio said that the Bank of Portugal had “opened up an enquiry process over the omission of information that should have been reported” and that investigations were “reaching a conclusion”.

So far, 60 credit operations involving the family of the former chairman and founder, and other bcp directors are under investigation.

In the meantime, Vítor Constâncio said there was no reason for the general public who had accounts at the bank to be concerned for the safety of their funds.

BCP Crisis timeline – a diary of corruption, infighting and woe

May 7, 2007 – BCP’s take-over bid for BPI fails. Shareholders only agree to stump up 30 million shares (around three per cent of the total capital available) for the take-over plan, which BPI turns down.

May 28, 2007 – Chairman Jardim Gonçalves and CEO Paulo Teixeira Pinto fall out over the banks general direction and policy at a General Assembly meeting in Porto following the failed take-over.

August 8, 2007 – Eccentric art dealer, multimillionaire impresario and key BCP shareholder Joe Berardo criticises excessive expenditure among key management and board members including inappropriate use of private jets for non-bank business and slams what he calls “white collar fraud.”

August 31, 2007 – Teixeira Pinto resigns his position as CEO of the Board of Directors as boardroom clashes with Jardim Gonçalves reach open warfare pitch.

October 13, 2007 – Leaks reveal that Jardim Gonçalves illegally lent his son an unsecured loan through the bank of 12.5 million Euros to prop up ailing and bankrupt companies.

October 16, 2007 – Financial watchdogs investigate alleged favouritism, nepotism and cronyism to Filipe Gonçalves and shareholder Goes Ferreira. Shares drop 2 per cent.

November 26, 2007 – BPI fails in its hostile takeover bid for the now weakened BCP – lead by BPI’s Fernando Ulrich, Millennium bcp shareholders say the bid undervalues the bank and react against it.

December 2, 2007 – Joe Berardo attacks an alleged 28.5 million Euro write-off in favour of shareholder Goes Ferreira.

December 4, 2007 – Shareholder rebellion forces the resignation of Jardim Gonçalves who walks away with a 60 million Euro golden handshake. Stays on as a key shareholder.

December 13, 2007 – Joe Berardo makes a formal complaint on alleged irregularities at BCP to the Procurator-General of the Republic. President Cavaco Silva reveals his disquiet at the financial image abroad that the scandals are causing, particularly on the New York Stock Exchange which downgrades the bank.

December 21, 2007 – Bank of Portugal governor Vítor Constâncio calls meeting with main BCP shareholders to discuss alleged abuses and irregularities.

January 15, 2008 – Carlos dos Santos Ferreira elected to the Presidency of the Board of Directors of BCP by an overwhelming majority defeating Miguel Cadilhe.

January 17, 2008 – Vítor Constâncio announces intention to address the Portuguese parliament about the on-going investigations at BCP. Bank of Portugal has 160 inspectors at its disposal investigating the bank. Opposition party politicians across the board fail to swallow Bank of Portugal governor’s explanations over the ongoing BCP investigations and call for an Enquiry Commission to be set up.

Vítor Constâncio argues that his hands are tied by the law as to what he can divulge. Finance Minister Fernando Teixeira dos Santos says full explanations will be given on January 28. The bank loses 6.6 billion Euros in six months. Shares fall from 4.22 Euros to 2.37 Euros – a loss of 13.5 per cent in real terms.

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